- CIFI will provide up to US$ 17 MM through a long-term structured loan and syndicate the remainder of the financing for a plant expansion.
- The Chilean plant Eco indef, located in the Bio Bio region, is a producer of wood pellets, a better alternative to burning firewood or fossil fuels.
Indef S.A. requested Corporación Interamericana para el Financiamiento de Infraestructura, S.A. to structure up to thirty-two million five hundred thousand dollars (US$32,500,000) in senior debt to refinance and provide working capital for a pellet mill in the Chilean province of Bio-Bio, the largest pulp and wood producing region in Chile and the second largest in Latin America after Brazil.
The facility is already operational and produces 125,000 to 375,000 tons of wood pellets per year from local forestry industry waste.
In Chile, air pollution levels are high, causing a high rate of respiratory diseases in the population. According to the Residential Energy Transition Strategy of the Ministry of Energy (2020), it is imperative to take action in the face of pollution related to wet firewood. As part of the fight against this problem, the Chilean government has been considering the official transition from the use of firewood to pellets.
Following the announcement of these national and regional plans, the Eco Indef plant joins the fight against air pollution with its domestic and industrial quality pellet production project, helping the environment and the community, as it also, directly and indirectly, employs local people.
In the words of Carla Chizmar, CIFI’s Head of ESG, “the real impact of the project lies in its ability to reuse waste from the forestry industry to convert it into raw material that gives rise to a less polluting and more efficient vegetable fuel.”
By national and regional plans, the Eco Indef plant is aligned with government regulations for environmental protection and the Climate Ambition Alliance promoted by the country for carbon neutrality and greenhouse gas reduction. The plant is also in line with the Atmospheric Decontamination Plan for the Los Angeles Commune to make way for the replacement of wood-burning stoves with pellet stoves and the thermal reconditioning of homes. Both private industry and the government have invested around 50 million dollars to achieve these objectives.
In this regard, CIFI’s Head of ESG emphasized that “the replicability and positive impact on the environment and society make this project a responsible and sustainable investment, in line with CIFI’s sustainability strategy and its goals to combat climate change.”
Ramón Candia, CIFI’s Investment Director, commented: “This has been great teamwork and a great milestone for CIFI, which has entered the pellet sector, positively impacting the environment and people’s lives. Candia reiterated that this would be possible by substituting charcoal in electricity generation and generating less pollution and less impact on populations that will be able to heat their homes with a cleaner fuel. Great job! Proud to be part of CIFI!”.
About Eco Indef
Eco Indef is part of INDEF, S.A., a company with more than 28 years of experience in the Chilean forestry industry and employing close to 800 people. INDEF also holds the title of the largest provider of forestry services in Chile. Among its main clients are the largest pulp and wood producers in the country, such as CPMC, Arauco, and Masisa.
It has about 9 thousand hectares planted and maintained per year. In terms of biomass, it has the largest installed production capacity, which allows it to produce about 600 thousand tons of biomass annually.
CIFI is a non-bank financial institution with over 20 years of experience in infrastructure and energy financing in Latin America and the Caribbean. Created in 2001, the company has analyzed more than 600 projects and has participated in more than 200 transactions for a value of more than US$1.8 billion. CIFI has become a leading participant in the trend toward sustainable infrastructure projects in Latin America and the region’s overall economic development.